Apple projects $68 million Q1 loss

After a preliminary review of first-quarter results, Apple Computer says it will post a net operating loss of 55 cents per share, or $68 million, after taxes. A restructuring is planned.

January 10, 19966:00 PM PST

CUPERTINO, California--Apple Computer officials this afternoon released a preliminary review of first-quarter financial results that shows a loss of $68 million, or 55 cents a share. News of the impending loss stirred up new rumors of a possible sale or takeover of the company.

Although unit shipments were up 12 percent for the quarter that ended December 29, 1995, and revenues increased 11 percent, gross margins dropped to around 15 percent. Gross margins were 20.7 percent the previous quarter and 28.7 percent at the end of the first quarter a year ago.

Net sales for the quarter were also below Apple's internal projections. In response to the disappointing results, company officials said they would restructure the business. Final results for the quarter will be released on January 17.

At the Macworld Expo in San Francisco, users and third-party vendors selling Apple-related wares took the news calmly. "It's not the first time and it won't be the last," said Tony Dolphi, marketing director for Vendor Perspective, a maker of Macintosh video systems. "We're used to this bad news--just like we're used to the Windows world laughing at us. If someone takes over, they still have to make Macintoshes."

The company's financial results don't mean much to the average Macintosh user, noted Neil McManus, an analyst with Digital Media, an industry newsletter published by Softbank. "A typical Mac user doesn't feel the loss because it's all very abstract to them," said McManus. "They're focused on what they need for day-to-day life. I don't sense an impact on Mac users as long as the platform survives. The question is, will all these troubles for Apple eventually spell trouble for the platform?"

Not surprisingly, news of the loss provided new grist for the industry rumor mill. According to sources, Apple could even become the target of a hostile takeover bid. The hot rumor at the show says Sony is after Apple, according to one Macworld attendee.

"These rumors have been going around for years. Why would we buy Apple when we're entering the PC market in the fall of '96 with an Intel-based machine?" said a Sony spokesperson at Macworld.